Ofgem says it will defend decision to slash triad avoidance payments

Flexible generation firm Peak Gen, along with seven over companies, has requested a judicial review of Ofgem’s decision earlier this year to massively reduce triad avoidance payments.

Ofgem said it plans to defend the decision, which will remain standing unless struck down in court.  

“Peak Gen Top Co, along with seven other companies which own or have interests in power generation, has requested a judicial review in respect of Ofgem’s decision on embedded benefits,” the company said in a statement to Utility Week.

“This is now a matter of public record on the register maintained at the Royal Courts of Justice.

“In light of the on-going legal action it would not be appropriate to provide further details at this time.”

In June, Ofgem confirmed plans to almost entirely remove the residual element of triad avoidance payments, cropping it from the current level of around £47/kW to between £3/kW and £7/kW.

The regulator argued the payments were giving unfair advantage to distributed generators and were set to rise even further without action.

Triad avoidance payments are one of a number of financial advantages – known as embedded benefits – which are available to generators embedded within distribution networks.

Embedded generators can receive the payments for helping suppliers to reduce their Transmission Network Use of System (TNUoS) charges. They are able to do this because they are effectively treated as negative demand during the triad periods of peak demand, which are used to set the charges.

TNOuS charges contain a locational element, which reflects the cost of the reinforcements needed to accommodate new generation in different regions, and a residual element, which covers the sunk costs of the existing transmission network.

“Ofgem has been served with a claim for judicial review,” the regulator said in a statement. “We are defending the claim. Our decision stands unless quashed by the court.”

What to read next